No winners as Tatts spat spreads online

Under investigation over "financial irregularities" ... chief executive of the City Tattersalls Club, Tony Guilfoyle.

A bookies' brawl over a disqualified horse brought Sydney's City Tattersalls Club into existence almost 120 years ago. A very different kind of brawl, with the hurling about town of allegations of dwindling finances and foolhardy expenditure by the club, now casts doubt on the club's future.

City Tatts is undeniably in trouble. Profits from its 437 poker machine licences have decreased by more than 15 per cent over the past six years and the membership has halved in the past decade.

The club has commenced talks with property developer Colliers and there are fears by some members that this may signal the beginning of the end for one of the oldest registered clubs in the country.

Now the club's chief executive, Tony Guilfoyle, is being investigated by the Office of Liquor, Gaming and Racing over complaints by members alleging, according to authorities, ''financial irregularities'' over the sum of more than $220,000.

A small group of long-standing but disgruntled members, some of whom hold life memberships, has been agitating for the past six years for reform of the club's management and board, known as the committee. They have started to air their grievances on a forum and blog.

''The committee of a registered club is supposed to be there to protect the interests of members by overseeing executive management,'' James Stewart, a life member of the club, says. ''But this board is operating to protect the interests of the chief executive, who has some serious questions to answer.''

Stewart was suspended from the club in 2010, two days after he sent a letter to the committee secretary raising concerns about the Bookmakers Super Fund, which merged with the City Tattersalls Club Staff Super Fund in 2004.

''There is a very small cell of disgruntled members who are extremely active - and [they would be] lucky to comprise six,'' club chairman Patrick Campion said. ''[Their] blog will give you an insight into the malice and mischief. It's defamation running wild and completely irresponsible.''

Stewart is barred from the club, and the parties are awaiting mediation.

While management and the board claim the disgruntled members number no more than half a dozen, by December 2006 at least 77 members were disgruntled enough with Guilfoyle's management to force an extraordinary general meeting.

The committee responded by changing the rules, effectively increasing the number of members required to sign a written request to call for a meeting from 50 to 1000. Campion said this was done because of the prohibitive cost associated with holding extraordinary meetings, which were being called by members in a ''vexatious way''.

By this stage, Guilfoyle had been chief executive for little more than two years, having been employed by the club fresh out of high school in 1984.

On an annual salary of $540,000, he is one of the state's highest paid registered club chief executives, industry sources say.

A 2004 letter by the club's then treasurer, Keith Free, recommending Guilfoyle's appointment stated the club was in a financially secure position.

Of the 1500 registered clubs in NSW, Silks City Tatts was ranked in the top 20 for gaming machine revenue.

Today the club has $24 million worth of liabilities including an $18 million bank loan - despite having owned its original premises outright for more than a century - and last year posted an operating loss of $210,732.

Over the past five years, the club's two restaurants have consistently posted combined operating losses of between $533,000 and $810,000, despite not having to pay rent.

''You'd have to try awfully hard to lose that amount of money when you're a business that's not paying any rent,'' says one club member, who did not want to be named. Like other members the Herald has spoken with, he was concerned his membership would be revoked if he spoke out publicly.

But Guilfoyle says consistent losses on food and alcohol are commonplace in registered clubs, because they have the duty to members to operate seven days a week, regardless of commercial realities.

Employees claim that in the past year, dry cleaners have refused to release staff uniforms and garbage contractors have refused to collect rubbish because of unpaid bills.

The club's liabilities for trade and other payables is almost $4.6 million, up from $3.6 million the previous year.

Guilfoyle said the club was performing well in comparison with other gaming-reliant businesses in the CBD, where he said revenue was down on average about 50 per cent because of the GFC and the 2007 introduction of anti-smoking legislation. ''But business is tight, I'll say that,'' he said.

A series of refurbishments and property acquisitions have caused a blowout in the club's liabilities.

In late 2007, the club bought the neighbouring Merivale building at 194 Pitt Street, which, after GST and stamp duty, plunged the club almost $10 million into debt. Five years on, all but one of the building's eight storeys remain empty, while the club continues to pay interest and bank charges of more than $700,000 a year on the loan . No DA has ever been lodged with the City of Sydney.

Campion, who was on the club's committee at the time of the purchase but was not the chairman, does not deny the club has entered into talks with Colliers and admitted the club had insufficient funds to do anything further with the building on its own.

''Needless to say, we're looking at alternate forms of income,'' he said. ''We don't want to be forever reliant on gaming.''

Four months before his death in January, a long-standing club member, Kevin Pomering, wrote to Campion, accusing the club's committee and management of making poor financial decisions.

Campion, a defamation solicitor, responded in writing, warning the terminally ill Pomering that his allegations were offensive and defamatory.

''I put you on notice that you should exercise great care as to where and how you might choose to repeat that allegation,'' Campion warned in his letter.

It wasn't just Pomering's queries over the $221,000, now the subject of a government investigation, that prompted Campion's response. Allegations surrounding a club donation to honour the memory of Campion's father had irked him most.

The $80,000 given to St John Ambulance's ophthalmic care unit at Pius X Medical Clinic, in Moree, was the largest single donation made by the club since 2005, when it gave $100,000 for tsunami relief.

The only other donation that has come close in the past six years is one made to Bear Cottage, a residence for terminally ill children in Manly, which received $27,525.

While the merits of donating to such a worthy cause as eye laser equipment was not questioned, the size of the donation was by several members, including Pomering, after they learnt the chairman's brother, Michael Campion, also a City Tatts member, was chairman of St John's ophthalmic branch.

An August 2007 report in the Moree Champion stated City Tatts contributed half the cost of the equipment ''in memory of Dr Frederick (John) Campion, one of the founders of the Moree medical clinic Pius X''.

''Visiting doctor to Pius X and Dr Campion's son, Dr Michael Campion, along with his brother Patrick initiated the purchasing of the equipment, in memory of their father, through St John Ambulance Australia,'' the newspaper reported.

Campion told the Herald that until the matter was raised at a committee meeting he had been unaware his brother was seeking charitable funds from the club and he did not speak or vote on the matter when it was approved.

Members are also airing other concerns on blogs and forums, including at least $300,000 paid in marketing/finance consultancy fees to Guilfolye's partner in a private business venture that owns two resorts, in Mittagong and Nowra.

Queries have also been raised over Guilfoyle's use of the architectural firm Georgeson and Associates, which has collected more than $800,000 in consultancy fees for club refurbishments over the past six years while at the same time building Guilfoyle's Springs Resort in Mittagong and completing a $750,00 renovation of Guilfoyle's Cronulla home.

Guilfoyle said he paid ''commercial rates and everything'' for the renovation.

''Why is Tony not allowed to use a good architect if he is impressed by what he does here at the club?'' Campion said.

While there is no suggestion that the use of the architects or marketing/finance consultants was improper, the club has never issued tenders for either contracts because, as Campion explained, both companies had a long association with the club and were the best people for the job.

Also angering some members and employees are the ongoing weekends away for club directors and their spouses, which cost club members up to $50,000 a year.

Campion said the trips were essential for unpaid board members ''to bond'' and were recompense for the time they spent away from families while on club business.

But agitating members say the club can ill afford such jaunts, and are calling on the committee to abandon next month's planned retreat, to Melbourne's Crown Casino, and hold it at City Tatts instead.

As one member observed on the club's forum:

''What chance have you of attracting other organisations to use your venue for meetings when you don't use it yourself?''